Ontario's 2024 Budget Overview:
On March 26, 2024, Ontario's Minister of Finance, Peter Bethlenfalvy, unveiled the province's budget for the year, aptly titled "Building a Better Ontario." This strategic financial plan underscores significant labor and vital public services investments, achieved without imposing additional taxes or fees. Central to the budget is the advancement of the "Plan to Build," focusing on infrastructure improvements aimed at accelerating housing construction and reducing costs for both families and businesses.
Corporate and Personal Income Tax Measures
The 2024 budget holds steady on corporate income tax rates, introducing no new changes. Small business corporations benefit from a combined federal and Ontario tax rate of 12.2% up to a $500,000 threshold. General corporations face a 26.5% rate for non-manufacturing and processing (Non-M&P) activities and a slightly lower rate of 25.0% for manufacturing and processing (M&P), barring those ineligible for temporary reductions connected to zero-emission technology manufacturing.
To illustrate these rates visually, we've prepared a chart comparing the combined federal and Ontario corporate income tax rates for 2024 across different corporation types:
2024 Combined Federal and Ontario Corporate Income Tax Rates
The budget also introduces a simplification of the Ontario Computer Animation and Special Effects (OCASE) Tax Credit. Previously linked to other film and television tax credits, the budget proposes to eliminate this requirement and introduce simplified eligibility criteria, including a $25,000 minimum labor expenditure per production, effective from March 26, 2024.
On the personal income tax front, rates remain unchanged, with the top marginal rate for Ontario set at 13.16% for 2024. The various types of income are taxed at top combined federal and provincial rates as follows: 53.53% for salary, business income, and interest; 26.76% for capital gains; 39.34% for eligible dividends; and 47.74% for non-eligible dividends.
2024 Top Marginal Personal Income Tax Rates in Ontario
Key highlights include the extension of gas and fuel tax rate cuts, enhancements to the Non-Resident Speculation Tax (NRST) for improved compliance and fairness, and the provision for municipalities to lower taxes on new purpose-built rental properties. Additionally, the budget proposes an elimination of the 6.1% wine basic tax on sales of Ontario wine and wine coolers in on-site winery retail stores, effective April 1, 2024, alongside a commitment to modernize the Tobacco Tax Act.
The 2024 Ontario budget lays a clear path towards a better Ontario by focusing on strategic investments in infrastructure, maintaining fiscal stability through unchanged tax rates, and introducing measures to support key industries and address the housing affordability crisis. For Lekadir LLP and its clients, understanding these changes and their implications is crucial for successfully navigating the year ahead.
